Boosting business investment in research and development

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

The Government’s research and development tax incentive (RDTI) has supported more than $2 billion of New Zealand business innovation — an increase of around $1 billion in less than nine months.

“Business expenditure on research and development makes up about 60 percent of national spend. The RDTI is therefore a flagship initiative to realise the Government’s goal of raising national research and development expenditure to 2 percent of gross domestic product,” an IRD statement said.

The RDTI provides a 15 percent tax credit for businesses performing eligible research and development activities in New Zealand.

RDTI uptake is growing steadily as businesses invest in the research and development needed to fuel innovation and boost the New Zealand economy.

To date, the Government has provided more than $312 million of tax credits through the scheme.

From July 2019 to May this year, the eligible expenditure for 51 Gisborne/Hawke’s Bay businesses was $19.93m, which amounted to an RDTI credit total of almost $3m.

“As more businesses become aware of the RDTI and see the benefits it can provide beyond their bottom line, business research and development in New Zealand looks set to continue to increase in size, scope and quality,” an IRD spokesman said.

“This is a positive sign for the wider research, science and innovation system, which is undergoing its largest reforms in 30 years through the Te Ara Paerangi – Future Pathways programme.

“To make the scheme more accessible and attractive, in-year payments have been introduced to allow businesses to receive regular payments throughout the year, rather than having to wait for the money to be paid out after the end of the tax year.

“The in-year payment scheme is a world first and enables small businesses and start-ups to better manage their cashflow.”